You are on page 1of 1


Economics Dr. Sauer

Ch 1: Markets worksheet
Suppose we are analyzing the market for hot chocolate. Graphically illustrate the impact each of the following would have on demand or supply for hot chocolate. Also show how market price and quantity would change.

a. Winter starts and the weather turns sharply colder. People tend to drink more hot drinks when it gets cold out.

b. The price of cocoa beans, which are used to make hot chocolate, falls.

c. The US Surgeon General announces that hot chocolate cures cancer.

d. Due to a labor strike, no one picks the cocoa beans and the crop is ruined.

e. Due to a recession, peoples incomes are lower. With less income, people buy fewer goods that are luxuries like hot chocolate.

f. A new production process is invented that automates the production of hot chocolate.